Let’s continue with this series on cognitive biases and fallacies written by Rolf Dobelli in his book “The Art of Thinking Clearly”.
Here is a quick rundown of the first four parts in case you have not read them.
Part 1 – click HERE
Part 2 – click HERE
Part 3 – click HERE
Part 4 – click HERE
We feature another three examples of how our thinking, perception and judgement may become clouded.
12. Exponential growth
Human minds are trained to think linearly.
Normal arithmetic progression (i.e. adding up numbers sequentially) is easy for our brains to wrap around.
However, in recent years and with the advent of the Internet, some companies and businesses have experienced exponential growth.
Exponential growth requires you to think in a geometric progression (i.e. multiplication of a sequence of numbers by a common ratio).
Investors would find it tough to fathom the growth of such companies as such growth...